China: Significant Revision To The Case Acceptance And Prosecution Criteria (II): General Overview And New Criminal Thresholds For Duty-related Crimes

On April 29, 2022, the Supreme People's Procuratorate (the "SPP") and the Ministry of Public Security jointly issued the revised Provisions (II) on the Criteria for Acceptance and Prosecution of Criminal Cases under the Jurisdiction of the Public Security Organs (hereinafter referred to as the "RevisedCase Acceptance and Prosecution Criteria (II)"), which will take effect on May 15, 2022. This is the first comprehensive revision since the issuance of the Case Acceptance and Prosecution Criteria (II) in May 2010 and its supplementary provisions in November 2011. This article analyzes and discusses the application of the Revised Case Acceptance and Prosecution Criteria (II) and the revision of relevant standards for the prosecution of duty-related crimes.

I. OVERVIEW AND APPLICATION

1. Revisions

The Revised Case Acceptance and Prosecution Criteria (II) covers a total of 78 types of economic crimes under the jurisdiction of public security organs, of which:¹

(1) the criminal thresholds for 21 types of cases have been revised and refined according to the revision of laws and judicial interpretations, including the adjustment of the criminal thresholds for nine types of crimes related to securities and futures based on the Amendment (XI) to the Criminal Law of the People's Republic of China (hereinafter referred to as "Amendment (XI) to the Criminal Law") and the relevant revisions to the securities-related laws.

(2) the criminal thresholds for 25 types of cases have been revised and refined with reference to the judicial interpretations being studied and drafted by the Supreme People's Court (the "SPC") and SPP, including the crime of accepting bribes by non-state functionaries in line with the latest draft of relevant judicial interpretations.

(3) the criminal thresholds for 15 types of cases have been revised and refined with comprehensive consideration of economic and social developments, balance of similar crimes, and other factors, including the amount criteria of the criminal thresholds for seven types of cases including bill fraud, as well as the specific circumstances of the criminal thresholds of eight kinds of cases including the crime of smuggling counterfeit currency.

(4) the continuance of the original provisions for 17 types of crimes, of which the relevant laws and judicial interpretations have not been amended or have been able to meet the needs of judicial practice.

2. Revision Highlights

The Revised Case Acceptance and Prosecution Criteria (II) closely follows the trend of China's economic and social development and focuses on the new situations and characteristics of economic crimes in China, with the following highlights.

(1) Outstanding political nature: adheres to the strict punishment of illegal fund-raising, money laundering, and securities and tax-related crimes, to prevent the disorderly expansion of capital,² and to protect social and economic development. For example, the Revised Case Acceptance and Prosecution Criteria (II) categories the criminal thresholds for the crime of illegal business operations into twelve different situations and it further clarifies the illegal business operations related to the buying and selling of foreign exchange or trading foreign exchange in disguise and their corresponding criminal thresholds.

Vivid reflection of contemporary features³: based on various issues in China's current market development, criminal thresholds were raised and adjusted for duty-related crimes committed by non-state functionaries. For example, considering that cryptocurrency is currently frequently used in illegal and criminal activity, the Revised Case Acceptance and Prosecution Criteria (II) details the definition of "currency".

Distinct nature of the rule of law and practicality⁴: since the promulgation of the Case Acceptance and Prosecution Criteria (II), the Criminal Law has been amended several times over the last ten years, and various supporting judicial interpretations have also been promulgated. As to those crimes where the thresholds are unclear due to successive amendments (such as the crime of obtaining loans by fraudulent means), this revision has also made further modifications and improvements.

3. Issue of Application

According to the Provisions of the Supreme People's Court and the Supreme People's Procuratorate on Retroactivity Issues in the Application of Criminal Judicial Interpretations, the principle of retroactivity in applying criminal judicial interpretations is also subject to the principle of "following former provisions coupled with lighter punishment" in the Criminal Law, that is:

(1) For acts occurring before the (new) judicial interpretation comes into force and are not regulated under the relevant judicial interpretations at that time, cases arising from such acts that have not been or are currently being handled after the implementation of the (new) judicial interpretation shall be handled in accordance with the provisions of the (new) judicial interpretation.

(2) For acts occurring before the judicial interpretation comes into force and are already regulated under the relevant judicial interpretations at that time, cases arising from such acts shall be handled in accordance with the judicial interpretations at the time of the acts, except when the application of the new judicial interpretation is more conducive to protect the criminal suspects and the defendants, the new judicial interpretation shall apply.

For example, the Revised Case Acceptance and Prosecution Criteria (II) reduces the criminal threshold for the crime of accepting bribes by non-state functionaries, as specified under Article 163 of the Criminal Law, from RMB 60,000 to RMB 30,000. Therefore the relevant crimes occurring before the implementation of the Revised Case Acceptance and Prosecution Criteria (II) shall be prosecuted according to the amount criteria of RMB 60,000; another example is that the Revised Case Acceptance and Prosecution Criteria (II) raises the criminal threshold for the crime of obtaining loans, accepting bills or financial bills by fraudulent means, as specified in Article 175 of the Criminal Law, from a direct economic loss of RMB 200,000 to RMB 500,000, therefore the relevant cases before the implementation of the Revised Case Acceptance and Prosecution Criteria (II) shall still be prosecuted according to the amount criteria of RMB 500,000.

II. DUTY-RELATED CRIMES

The current revision of the Case Acceptance and Prosecution Criteria (II) covers a total of five duty-related crimes for non-state functionaries, including:

Crime

1. Enhance the Punishment for Duty-related Crimes Committed by Non-State Functionaries

Regarding adjustments to the criminal thresholds for five duty-related crimes committed by non-state functionaries, the most obvious change is that the criminal thresholds for four crimes have been lowered. Except for the crime of offering bribes to a functionary of a foreign country or an official of an international public organization, the previous criminal threshold for the other four crimes were all based on Article 11 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues concerning the Application of Law in the Handling of Criminal Cases of Corruption and Bribery, that is, the amount criteria was twice that of the corresponding criminal threshold for the crimes of accepting bribes, offering bribes, embezzlement and misappropriating public funds involving state functionaries; however, the current revision lowers the monetary threshold for duty-related crimes committed by non-state functionaries, which is now consistent with the corresponding crimes committed by state functionaries.

In fact, the Revised Case Acceptance and Prosecution Criteria (II) increases the punishment for duty-related crimes committed by non-state functionaries, which is consistent with the Amendment (XI) to the Criminal Law to increase the maximum penalty for relevant crimes and adjusts the range of sentencing (for specific analysis, please see the JunHe Law Review: "11th Amendments to the PRC Criminal Law: Duty Crimes"). In judicial practice in the future, the punishment for internal crimes against the property of private enterprises may be further increased to ensure fair competition among various market entities,⁵ and enterprises need to pay attention to further strengthening the establishment of their compliance systems to prevent and put an end to any involvement of staff in relevant criminal activities to avoid unnecessary legal risks.

2. Unify the Sentencing Criteria for Offering Bribes to a Functionary of a Foreign Country or an Official of an International Public Organization

In 2011, when China introduced the Amendment (VIII) to the Criminal Law, the crime of offering bribes to a functionary of a foreign country or an official of an international public organization was added into Article 164, paragraph 2 of the Criminal Law. This was due to the fact that after signing and acceding to the United Nations Convention against Corruption (UNCAC), China had to further criminalize corruption in accordance with the relevant provisions of UNCAC.⁶ However, since the establishment of this crime, not only has the criminal threshold not aligned with the crime of offering bribes to non-state functionaries also stipulated under Article 164, but there have been very few cases of applying this crime in judicial practice, which is linked to the market and economic situation in China.

As China is further implementing the "Belt and Road" initiative, which will gradually promote Chinese enterprises to go abroad and add new impetus to global development, further attention needs to be paid to the legislative, judicial and law enforcement issues against overseas corruption. Combined with the additional adjustments in Case Acceptance and Prosecution Criteria (II) regarding sentencing standards or offering bribes to foreign public functionaries and officials of international public organizations, it can be seen that such a crime will probably no longer be "marginalized" in practice, and will further promote the business integrity of enterprises in interactions with foreign government officials and officials of international organizations, as well as strengthen the fight against overseas corruption in the fields of foreign business such as cross-border trade and international investment.

3. Future Enforcement Trends and Corporate Compliance Points

As mentioned earlier, the Revised Case Acceptance and Prosecution Criteria (II) actually decreases the criminal threshold for duty-related crimes committed by non-state functionaries to the same amount as those committed by state functionaries. We note that when the SPP issued this judicial interpretation, it explicitly mentioned that the revision of the criminal standard for duty-related crimes committed by non-state functionaries was based on the judicial interpretations recently studied and drafted by the SPC and SPP. We understand that the future adjustment of relevant crimes may have the following possibilities:

(1) Uniformity in the criteria for filing duty-related crimes of non-state functionaries and those of state functionaries, which indicates that China currently does not distinguish between whether bribees in crimes related to accepting bribes is a state functionary or not, and emphasizes that corruption and bribery in the commercial field should be treated exactly the same as corruption involving public authorities, and the similarly strict means would be adopted to combat it.

(2) Further adjustments will be made to the standards for the filing and sentencing of duty-related crimes in the future. The SPP clearly mentioned in its Q&A that some judicial interpretations are currently being studied and drafted by the SPC and SCC, while the Amendment (XI) to the Criminal Law did not clearly stipulate the criterion for the third grade of sentencing after adjusting the sentencing levels for some duty-related crimes of non-state functionaries from two layers to three layers. It cannot be ruled out that the sentencing thresholds of relevant crimes may be further revised in the future.

In view of this, we suggest that enterprises pay attention to the following points in their daily anti-corruption and anti-bribery compliance practices:

(1) Establish and maintain an effective anti-corruption and anti-bribery compliance system, set up internal audit and investigation systems in line with the actual situation of the enterprise, and detect and deal with violations of the relevant compliance system as early as possible. Daily compliance training for employees should also emphasize the application of stricter criminal thresholds for relevant crimes, to warn employees not to embark on illegal crimes for personal gain.

(2) Previously at the criminal level, different criminal thresholds were adopted for duty-related crimes involving non-state functionaries and state functionaries. In practice many enterprises set their standards for gifts, hospitality and travel expenses in business in accordance with the market situation, and such standards were often higher than the relevant standards for state functionaries set by the central and state organs of China. However, if the criminal thresholds become and remain unified in the future, then at the judicial and law enforcement levels, duty-related crimes involving non-state functionaries will be treated the same as those involving state functionaries. Enterprises may consider whether to further adjust their expense standards with reference to the relevant regulations of the central and state organs, such as the Measures for the Administration of the Travel Expenses of Central and State Organs, the Measures on the Administration for Conference Fees of the Central and State Organs, the Measures on the Administration for Training Expenses of Central and State Organs, Measures for the Registration and Handling of Gifts Received by Functionaries of Central Party and State Organs in Domestic Interactions, Regulation of the State Council of the People's Republic of China on Giving and Receiving Gifts in Official Functions Involving Foreigners, etc.

Footnotes

1. https://www.spp.gov.cn/spp/xwfbh/wsfbt/202204/t20220429_555906.shtml#1

2. https://www.spp.gov.cn/spp/xwfbh/wsfbt/202204/t20220429_555906.shtml#3

3. Ibid.

4. Ibid.

5. Ibid.

6. http://www.npc.gov.cn/npc/c199/201105/03481cfa342a4ceb868ce4f668871907.shtml

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